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79R3846 PB-D
By: Eiland H.B. No. 1638
A BILL TO BE ENTITLED
AN ACT
relating to creation and operation of a pilot program under which
benefits for a compensable injury sustained by an employee are
provided through a qualified accident and health insurance policy
and endorsements to that policy.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Title 5, Labor Code, is amended by adding
Subtitle D to read as follows:
SUBTITLE D. ALTERNATIVE COMPENSATION PROGRAMS
CHAPTER 551. PILOT PROGRAM ON USE OF INSURANCE POLICY TO PROVIDE
MEDICAL AND INCOME BENEFITS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 551.001. DEFINITIONS. In this chapter:
(1) "Alternative benefit plan" means a plan of health
care benefits and wage replacement benefits offered by an employer
to an employee who sustains an injury in the course and scope of
employment in lieu of workers' compensation insurance coverage.
(2) "Commission" means the Texas Workers' Compensation
Commission.
(3) "Commissioner" means the commissioner of
insurance.
(4) "Course and scope of employment" has the meaning
assigned by Section 401.011(12).
(5) "Department" means the Texas Department of
Insurance.
(6) "Employer" means a person who employs one or more
employees.
(7) "Employee" means a person in the service of
another under any contract of hire, whether express or implied or
oral or written. The term includes an employee employed in the
usual course and scope of the employer's business who is directed by
the employer to perform services temporarily outside the usual
course and scope of the employer's business. The term does not
include an independent contractor or the employee of an independent
contractor.
(8) "Group health insurance policy" means a group,
blanket, or franchise insurance policy that provides benefits for
health care services resulting from accident or disease. For
purposes of this chapter, the term includes a group hospital
service contract or a group subscriber contract.
(9) "Plan issuer" means:
(A) a health insurer, including a life, health,
and accident insurance company, a health and accident insurance
company, and any other person operating under Chapter 841, 842,
884, 885, 982, or 1501, Insurance Code, who is authorized to deliver
or issue for delivery group health insurance policies in this
state; or
(B) an insurer authorized by the department to
write workers' compensation insurance in this state.
(10) "Program" means the alternative benefit plan
pilot program established under this chapter.
(11) "Qualified insurance policy" means a group health
insurance policy approved by the department and the commission as
provided by Section 551.051 that provides health care benefits for
accident or disease to each employee of an employer, regardless of
whether the accident or disease is caused by or directly related to
the employee's employment.
Sec. 551.002. EXPIRATION. The program is abolished and
this chapter expires effective September 1, 2009.
[Sections 551.003-551.050 reserved for expansion]
SUBCHAPTER B. GENERAL POWERS AND DUTIES OF
COMMISSIONER AND COMMISSION
Sec. 551.051. IMPLEMENTATION OF PROGRAM; POLICY APPROVAL
PROCESS. (a) The commissioner, in cooperation with the
commission, shall develop and operate a pilot program under which
an employer may offer an alternative benefit plan to the employer's
employees through a qualified insurance policy offered by a plan
issuer that:
(1) provides health care benefits to the employees,
including benefits for an injury sustained by an employee in the
course and scope of the employee's employment; and
(2) is in lieu of medical benefits under workers'
compensation insurance coverage as described by Subtitle A.
(b) Before a plan issuer may deliver or issue for delivery
in this state a qualified insurance policy, the plan issuer must
submit the policy to the department for approval in the manner
prescribed by the commissioner, accompanied by a filing fee set by
the commissioner by rule.
(c) The commissioner, by rule and in cooperation with the
commission, shall adopt guidelines for the approval of policies
submitted to the department under this section. The guidelines
must require that the policy include limits and coverages for
health care services, including hospitalization, that are at least
equivalent to the limits and coverages applicable to the medical
benefits provided to an employee covered under Subtitle A. The
policy may provide health care benefits using a preferred provider
benefit plan subject to Chapter 1301, Insurance Code.
(d) The commissioner shall review a policy submitted under
Subsection (b) not later than the 30th day after the date the policy
is submitted to the department. If the commissioner approves a
policy under Subsection (b), the commissioner shall submit the
approved policy to the commission for review not later than the
fifth day after the date on which the commissioner approval is
final. If the commissioner disapproves a policy, the department
shall notify the plan issuer who submitted the policy not later than
the fifth day after the date on which the policy is disapproved.
(e) The commission shall review a policy approved by the
commissioner not later than the 30th day after the date the approved
policy is received by the commission. If the commission determines
that the policy meets the guidelines adopted under Subsection (c),
the commission shall approve the policy and shall notify the
department not later than the fifth day after the date the
commission approval is final. If the commission disapproves a
policy, the commission shall notify the department, and the
department shall notify the plan issuer who submitted the policy
not later than the fifth day after the date on which the commission
disapproval notice is received by the department.
(f) If both the commissioner and the commission approve the
policy, the department shall notify the plan issuer not later than
the 10th day after the date of the final approval. The plan issuer
may begin using the policy as of the date of the final approval.
Sec. 551.052. ENDORSEMENTS; COVERAGE IN LIEU OF INCOME
BENEFITS; APPROVAL. (a) If a policy is approved under Section
551.051, the plan issuer shall offer the employer endorsements to
the policy that provide insurance coverage for each employee of the
employer, or the legal beneficiary of a deceased employee, against
a loss caused by:
(1) any loss of wages incurred as a result of an
accident or disease, regardless of whether the accident or disease
is caused by or directly related to the employee's employment; or
(2) the death of the employee.
(b) The plan issuer must submit an endorsement to the
commissioner and commission for approval in the manner prescribed
for approval of a policy under Section 551.051.
(c) The commissioner, by rule and in cooperation with the
commission, shall adopt guidelines for the approval of policy
endorsements submitted to the department under this section. The
guidelines must require that the endorsements include:
(1) reasonable income replacement coverage for the
period during which the injured employee is unable to work; and
(2) limits and coverages for death and burial benefits
that are at least equivalent to the limits and coverages applicable
to the benefits provided to an employee covered under Subtitle A.
Sec. 551.053. RULEMAKING. (a) The commissioner shall
adopt rules as necessary to implement the duties of the department
under this chapter.
(b) The commission shall adopt rules as necessary to
implement the duties of the commission under this chapter.
Sec. 551.054. REPORT TO LEGISLATURE. Not later than
December 1 of each year, the commission and the commissioner shall
submit a joint report to the governor, the lieutenant governor, the
speaker of the house of representatives, and the members of the
legislature regarding the status and results of the program.
[Sections 551.055-551.100 reserved for expansion]
SUBCHAPTER C. OPERATION OF PROGRAM
Sec. 551.101. EMPLOYER AUTHORIZATION TO OFFER ALTERNATIVE
BENEFIT PLAN. (a) Notwithstanding Subtitle A, an employer who
elects to participate in the program may offer an alternative
benefit plan to provide benefits to an employee who sustains an
injury in the course and scope of the employee's employment. An
employer may not offer an alternative benefit plan other than
through the program as provided by this chapter.
(b) An employer may offer an alternative benefit plan only
through:
(1) insurance coverage provided through a qualified
insurance policy; and
(2) endorsements to that policy approved by the
commission and the commissioner.
Sec. 551.102. WAIVER PROHIBITED; USE OF ARBITRATION. (a)
Unless the commission determines that the plan offers benefits to
an employee that are at least equivalent to the medical benefits and
income benefits required under Subtitle A, an employer may not
require an employee who is covered under an alternative benefit
plan to waive:
(1) a right of action of the employee or a legal
beneficiary of the employee at common law or under a statute of this
state to recover damages for personal injuries or death sustained
in the course and scope of the employment; or
(2) a right established under this chapter.
(b) An alternative benefit plan may not require an employee
or a legal beneficiary of an employee to submit a claim for personal
injuries or death sustained in the course and scope of the
employment to binding arbitration.
Sec. 551.103. PROVISION OF ALTERNATIVE BENEFIT PLAN
OPTIONAL. An employer who does not elect to obtain workers'
compensation insurance coverage under Subtitle A is not required by
this chapter to participate in the program. This chapter does not
affect the application of Section 406.033 to such an employer.
[Sections 551.104-551.150 reserved for expansion]
SUBCHAPTER D. PROVISION OF ALTERNATIVE BENEFIT PLAN
THROUGH QUALIFIED INSURANCE POLICY AND ENDORSEMENTS
Sec. 551.151. RESPONSIBILITIES OF EMPLOYER. (a) An
employer who elects to provide coverage under this chapter shall:
(1) pay any coinsurance or deductible otherwise
imposed on the insured employee; and
(2) continue the payment of wages to an insured
employee until that employee begins to receive insurance payments
in lieu of wages under the insurance coverage provided through
endorsements to the qualified insurance policy.
(b) If an employee receives benefits under an alternative
benefit plan, the employer shall maintain a qualified insurance
policy and endorsements for the benefit of that employee until the
benefits to which the employee is entitled have been paid. A
qualified insurance policy and endorsements required to be
maintained under this subsection must provide benefits adequate to
pay all benefits to which the employee is entitled.
Sec. 551.152. SUBROGATION. (a) This section applies to an
action to recover damages for personal injuries or death sustained
by an employee in the course and scope of employment against:
(1) an employer who has obtained a qualified insurance
policy and endorsements covering that employee; or
(2) a third party.
(b) A judgment against an employer shall be reduced to the
extent that the employee has been compensated or is entitled to be
compensated under the employer's qualified insurance policy or
endorsements. A judgment reduced under this subsection shall be
reinstated to the extent that the qualified insurance policy or
endorsements are canceled or otherwise fail to fully compensate the
employee or a legal beneficiary of the employee to the extent
provided by the policy or endorsements.
(c) An insurance company that is liable for the payment of
benefits to the employee or a legal beneficiary of the employee is
subrogated to the rights of the employee or legal beneficiary
against a third party.
[Sections 551.153-551.200 reserved for expansion]
SUBCHAPTER E. EFFECT OF ALTERNATIVE BENEFIT PLAN
Sec. 551.201. EFFECT OF ALTERNATIVE BENEFIT PLAN. (a)
Except as specifically provided by this chapter, Subtitle A does
not apply to an employer who provides an alternative benefit plan.
(b) An action brought to recover damages against an employer
for personal injury or death sustained by an employee in the course
and scope of employment is governed by this chapter only if the
employee or the employee's beneficiaries are covered by an
alternative benefit plan on the date that the cause of action
accrues.
Sec. 551.202. CONTRACT REQUIREMENTS. A person who
requires an employer, as a prerequisite to entering into a contract
with that employer, to present evidence of workers' compensation
insurance coverage shall accept instead of that evidence a
qualified insurance policy and endorsements issued under this
chapter from an employer who obtains and maintains in effect a
qualified insurance policy and endorsements.
SECTION 2. (a) The Texas Workers' Compensation Commission
and the commissioner of insurance shall adopt rules as required by
this Act not later than January 1, 2006.
(b) Subchapter E, Chapter 551, Labor Code, as added by this
Act, takes effect March 1, 2006, and applies only to an alternative
benefit plan entered into on or after that date.
SECTION 3. Except as provided by Section 2(b) of this Act,
this Act takes effect September 1, 2005.